Ambev S A : Reports 2021 First Quarter Results

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AMBEV REPORTS 2021 FIRST QUARTER RESULTS UNDER IFRS

São Paulo, May 06, 2021 - Ambev S.A. [B3: ABEV3; NYSE: ABEV] announces its results for the first quarter of 2021. The following operating and financial information, unless otherwise indicated, is presented in nominal Reais and prepared according to the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and to the accounting practices issued by the Brazilian Accounting Standards Committee ("CPC") and approved by the Brazilian Securities and Exchange Commission ("CVM"). The information herein should be read together with our financial information for the three-month period ended March 31, 2021 filed with the CVM and submitted to the U.S. Securities and Exchange Commission ("SEC").

OPERATING AND FINANCIAL HIGHLIGHTS

Net revenue: Commercial momentum continued in the quarter, with net revenue up 27.8% in 1Q21, thanks to volume growing by 11.6% and net revenue per hectoliter (NR/hl) increasing 14.5%. Net revenue grew in Brazil by 26.1%, in Central America and the Caribbean (CAC) by 28.2%, in Latin America South (LAS)1 by 44.0%, and in Canada by 1.6%. In Brazil, volume was up 12.1% and NR/hl increased 12.5%. In CAC, volume was up 10.1% and NR/hl grew by 16.5%. In LAS, volume grew 12.5% and NR/hl rose by 27.9%. In Canada, volume grew by 2.4% while NR/hl decreased by 0.9%.

Cost of goods sold (COGS): COGS and cash COGS (excluding depreciation and amortization) were up 35.3% and 38.6%, respectively. On a per hectoliter basis, COGS grew by 21.3% while cash COGS was up 24.2%, mainly due to transactional currency and commodities prices headwinds, package mix impacts and inflationary pressures in Argentina.

Selling, general & administrative (SG&A) expenses: SG&A and cash SG&A (excluding depreciation and amortization) were up 13.9% and 16.2%, respectively, mainly driven by variable compensation provision and higher distribution expenses, partially offset by Sales and Marketing phasing.

EBITDA, gross margin, and EBITDA margin: EBITDA reached R$ 5,327.2 million, which corresponds to an organic growth of 23.8%, with a gross margin of 52.3% (-260bps) and EBITDA margin of 32.0% (-110bps).

Normalized profit and EPS: Normalized profit was R$ 2,761.9 million, 124.9% higher than in 1Q20, due to higher EBITDA and better financial results. Normalized EPS was R$ 0.17 (+139.6%).

Cash generation and CAPEX: Cash flow from operating activities was R$ 2,836.9 million (+83.7%) and CAPEX reached R$ 1,327.3 million (-1.4%).

Financial highlights - Ambev consolidated

R$ million	1Q20	1Q21		% As Reported	% Organic
Volume ('000 hl)	39,011.5		43,530.2	11.6%	11.6%
Net revenue	12,602.6		16,639.8	32.0%	27.8%
Gross profit	6,959.4		8,694.4	24.9%	21.6%
% Gross margin	55.2%		52.3%	-290 bps	-260 bps
Normalized EBITDA	4,232.5		5,327.2	25.9%	23.8%
% Normalized EBITDA margin	33.6%		32.0%	-160 bps	-110 bps
Profit	1,211.3		2,733.3	125.7%
Normalized profit	1,227.8		2,761.9	124.9%
EPS (R$/shares)	0.07		0.17	140.4%
Normalized EPS (R$/shares)	0.07		0.17	139.6%

Note: Earnings per share calculation is based on outstanding shares (total existing shares excluding shares held in treasury).

• The impacts resulting from applying Hyperinflation Accounting for our Argentinean subsidiaries, in accordance with IAS 29, are detailed in the section Financial Reporting in Hyperinflationary Economies - Argentina (page 21).

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Press release - May 6, 2021

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MANAGEMENT COMMENTS

Ambev delivered a solid commercial performance in the first quarter, driven by a consistent strategy in which innovation, flexibility and operational excellence continued to be key pillars. We were better prepared to tackle some persisting COVID-19 headwinds than we were in March 2020, and these results give us reasons to be confident that our strategy is working.

Most countries showed sustained volume growth, whereby eight of our top ten markets delivered volume growth year over year and seven markets have already reached higher volumes compared to 2019, as illustrated in the chart below:

On a consolidated basis, our organic volumes grew by 11.6% this quarter, explained by strong commercial performance in all regions.

• In Brazil Beer, we delivered a solid start to the year, where according to our estimates we once again outperformed the industry by growing in all segments. The commercial momentum in the quarter was driven by consistent implementation of our commercial strategy and operational excellence, our agility to adapt to changes in the market, the resilience of our core brands, highly successful innovations and the growth of our premium and core plus portfolios.
• In Brazil NAB, volume was slightly up, still impacted by restrictions in on-premise consumption occasions and supply constraints.
• In LAS, positive volumes were driven by solid performances in Argentina, Chile, and Paraguay, with good performances in our core plus and premium portfolios, resulting in market share gains according to our estimates. Bolivia and Uruguay are still under pressure due to mobility restrictions.
• In CAC, we saw a strong volume recovery driven by our commercial initiatives, boosted by a gradual easing of restrictions throughout the quarter and a strong premium portfolio performance. Volume growth was led by Guatemala, Dominican Republic, and Panama, and almost all countries experienced significant above core mix improvement, delivering mid-teens NR/hl.
• In Canada, despite continued restrictions in place during most of Q1, we delivered volume growth and once again outperformed the beer industry by gaining market share across the country, and our beyond beer portfolio also gained share thanks to innovation.

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• Status of Operations

After beginning the quarter with a gradual lift in COVID-19 restrictions in most of the countries where we operate, in March we saw restrictions reinstated, especially in Brazil and LAS. We produced and commercialized our products according to regulations imposed by each local government where we operate. All of our breweries and distribution centers continued to operate.

• • In Brazil, an initial relaxation of restrictions was followed by the cancellation of Carnival and stricter restrictions in March and onwards, especially for bars and restaurants. Most regions started to gradually reopen in April.
  • In LAS, restrictions were more relaxed during the start of the quarter, progressively resuming towards the second half of the quarter. Bolivia and Uruguay continued to be the most affected by the imposed restrictions.
  • In CAC, countries continued to gradually reopen throughout the quarter. Panama had the strictest restrictions in early January, but progressively reopened as well.
  • In Canada, restrictions remained tight through the quarter and bars & restaurants were closed in most urban areas.
• Ambev as an Ecosystem

2020 was marked by great challenges brought by COVID-19, most of which are still present in 2021. Thus, we continued to develop stronger and sustainable relationships with our customers, reconnect with our consumers, and help our communities.

• In Brazil, given the cancellation of Carnival in February, we adapted and donated, to all 27 states' health departments, over 5,000 coolers which would have been used for street vendors during Carnival with the capacity to store and transport over 3 million COVID-19 vaccines simultaneously. We also launched initiatives to support those who were most impacted by the cancellation of festivities, such as the "Ajude um Ambulante" program through Zé Delivery, that helped about 20,000 street vendors recover their income; we partnered with the National Association of Waste Pickers (ANCAT) to provide financial aid to more than 2,800 waste pickers; we encouraged compliance with Government gathering restrictions, by offering free delivery during the holiday through Zé Delivery, paired with streaming entertainment for our consumers to enjoy from the safety of their homes.
  In January we donated 500 oxygen tanks to help overcome the Manaus crisis. Also, when the COVID- 19 second wave impacted the health care system, we announced the transformation of part of our Colorado brewery to produce, fill and donate enough hospital oxygen tanks to treat 166 people per day.
• In LAS, Quilmes -our subsidiary in Argentina- designed and built a COVID-19 Vaccination Center in its Parque de la Cervecería in Quilmes City to be operated by the Municipality of Quilmes and the Province of Buenos Aires, capable of vaccinating up to 1,000 people per day. This initiative is part of the Federal Humanitarian Aid Plan that the company has been carrying out since the pandemic began in Argentina, responding to the different needs of the communities neighboring its breweries and plants throughout the country.
• In CAC, Colmados Seguros in the Dominican Republic and Paisano Seguro in Panama are still in place, helping our customers guarantee secure spaces for consumers during reopening. In Panama, with the "Sacamos un Extra por nuestros Clientes" action we invested part of the S&M savings from

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the cancelled Carnival to aid the on-premise and connected with the pre-launch of Atlas Golden Extra. In the Dominican Republic we are supporting the Government with its COVID-19 vaccination plans.

• In Canada, Labatt initiated #TogetherAgain, a program to raise awareness about the efficacy, safety, and benefits of COVID-19 vaccination to overcome hesitancy. The goal is to pave the way for a time when we can all grab a beer #TogetherAgain.

We were honored to be recognized as one of the 10 most innovative corporate social responsibility companies of 2021 by Fast Company, for devising creative pandemic aid initiatives.

• Innovation and Business Transformation

Consumer-centric innovation and business transformation are pillars of our business and core to our commercial strategy. We have a framework of five growth drivers to address different pain points of our customers and consumers:

New flavors & enhanced value proposition

We continue building and expanding a solid and diverse beer portfolio, with different proposals matching different occasions and consumer needs.

• In Brazil Beer, Brahma Duplo Malte held its momentum, driving growth of the core plus segment and claimed a top 5 sales spot amongst our brands. Additionally, we continue to expand our innovations by piloting new core plus propositions.
• In LAS, we continued to develop our portfolio: in Paraguay, the recently launched Skol drove our core plus expansion. In Argentina, we began deploying Brahma Dorada in the Northern region and launched Brahma Flint 710ml. And in Chile we introduced Pilsen del Sur, enhancing our core brand portfolio.
• In CAC, we launched Gran Modelo (630ml) and in Panama Atlas Golden Extra, a full-bodied version of the Atlas Golden Light to enhance our above core development strategy.

Convenience for consumers

We continue expanding in the Direct-To-Consumer space with solutions for our consumers' pain points: (i) late hours availability, (ii) fast service that saves time for consumers, (iii) reasonable prices, and (iv) cold products ready to be consumed.

• In Brazil, Zé Delivery continued to grow exponentially, reaching 14 million orders in the quarter. In 2020, Zé delivery consolidated itself as the trusted authority for in-homeon-demand beverages consumption and through 2021 we will continue to focus on scaling up this platform.
• In LAS, in Argentina, Appbar continues to grow exponentially. In Chile, Casa de la Cerveza continued to experience record growth in number of orders and sales.
• In CAC, in Dominican Republic we continue to expand Colmapp, that delivers cold beer within 30 minutes.

Innovation in service to our customers

BEES, our B2B digital sales platform, helps retailers improve their purchases and increase their sales through technology, and empowers small and medium entrepreneurs by facilitating daily operations and enhancing our connection with them. BEES immerses our POCs into digital transformation, providing autonomy and customer support, enabling our customers to place an order in three clicks, any day, any time. The proposal is simple and

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boosts our customers' and partners' revenues through better assortment and execution. BEES is now expanding its reach as a marketplace, making several products from different categories easily available to clients.

• In Brazil, we continued to expand BEES and currently over 65% of our active customer base is purchasing through the platform. Since the roll-out last year, we already have 100% of our direct distribution centers operating under the new model.
  In March we announced that Menu.com will combine efforts with BEES to boost the development of new capabilities and accelerate its expansion. Menu.com is a marketplace startup founded in 2016 that has been accelerated by Z-Tech, our technology hub focused on small and medium businesses. In the two years with Z-Tech, Menu.com has seen its revenue grow 65 times and was recognized as the best startup in Brazil, according to the annual ranking of LinkedIn in 2020.
  We have also been developing DONUS, our own retail digital account and financial solutions. The goal of DONUS is to bring digital transformation to our small and medium retailers by offering simple payment solutions to empower the POC owner's finances. It offers debit card, POS, accounting solution, credit solutions, and digitalization of payments to Ambev for small merchants. By 1Q21 the number of DONUS clients had grown 10 times year over year.
• In CAC, Dominican Republic, our full digital operation, continues to lead the expansion of the BEES platform, actively sharing know-how and best practices with other operations. More than 90% of our customers are buying through BEES and its marketplace is exponentially growing, whereby non- Ambev products' revenue has grown triple digit and the more than 70 SKUs offered cover a majority of the POCs assortment already.

Health and wellness

• In Brazil Beer, we expanded Michelob Ultra, with its unprecedented low-calories and low-carb premium proposition in the Brazilian market. Stella Sem Gluten continues its rollout with great results.
• In Brazil NAB, we continued to reduce our sugar content through the portfolio, expand the rollout of For Me wellness shots and Natu, our version of Guaraná made with 100% natural ingredients.
• In CAC Michelob Ultra continued to grow double digit, and in Canada, it was the fastest growing beer brand in 1Q for the second time.

Future Beverages

• • In Brazil, we continue to expand Beats in partnership with the Brazilian popular artist Anitta, delivering significant volume growth.
  • In LAS, in Argentina our winery Dante Robino is still delivering triple digit volume growth as well as solid NR/hl increase.
  • In Canada, 1Q21 performance was impacted by the successful launch of products in the Hard Soda & Seltzer segments. Bud Light Seltzer's long anticipated launch got off to a fast start. Moreover, the continued success of Nütrl and its brand extension Nütrl Juic'd (Nütrl vodka soda with real fruit juice) allowed us to grow total share of segment in Hard Soda & Seltzer.
• Commercial Highlights

Premium

Our premium brands have grown above the industry in most of our markets in the first quarter:

ambev.com.br

Press release - May 6, 2021